Minister for Employment Affairs and Social Protection Regina Doherty has said her department is prepared to challenge in the courts the findings by the Data Protection Commissioner in relation to the Public Services Card.
Last month, the State's data watchdog found that the use of the card for many Government services had no basis in law.
Speaking on RTÉ's Morning Ireland, Ms Doherty said that based off their own legal advice, her department does not accept the findings of the report, and said there is strong legal backing for its stance.
She said her department had the highest of respect for the office of the DPC.
Ms Doherty said it may be first time a regulator has been challenged by a Government body, but said it would not be the last.
She said the department is seeking a meeting with the commission to discuss the findings at the earliest opportunity.
She said the Government will continue acting on the basis of legislation passed in 2005, on the basis that they have a clear legal underpinning to what they are doing.
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"To be respectful, where we have a difference is in the interpretation of the Social Welfare Consolidation Act 2005. My legal advice is incredibly strong that we have a clear and unambiguous legal basis to do exactly what we intended to do from 2005, and what successive governments have done since."
Ms Doherty said she will not publish the legal advice yet, but she has the intention of publishing the commission's report, as well as the Government's response.
However, the Irish Council for Civil Liberties has said the Government is taking the "nuclear option" in preparing to challenge the findings in the courts.
Speaking on RTÉ's Today with Sean O'Rourke, ICCL Executive Director Liam Herrick said the finding by the DPC was a conclusive finding by an independent statutory body with legal powers to make binding findings.
He said that the Government was refusing to comply by the findings and take measures to address them.
"When the Minister this morning referred to the fact that she wants to meet with the DPC, that is a bizarre suggestion," said Mr Herrick, "because there has been two years of ongoing meetings correspondence between her department and the Commission, this isn't something to sit down and have a cup of tea about now, they're findings, if you don't accept them - you can challenge them, that's a nuclear option and highly risky and regrettable"
He said it was easy for Ms Doherty to say they had a strong legal basis to support their case when nobody else has seen the legal advice.
Speaking on the same programme, Fianna Fáil spokesperson for Social protection Willie O'Dea, said the Government was handling the situation "very badly".
Mr O'Dea said a comprehensive debate on the issue was needed, and there was no need to extend the use of the Public Services Card to anything more than social welfare.